Let’s take a break from the Resolution articles we have been posting since the first of the month, and discuss an important topic on why 2013 may be the best time to buy a Windsor home.
First, let’s acknowledge that the past several years have been one big roller coaster ride. As real estate agents, we haven’t seen anything like the last seven years or so. For buyers, it’s been a remarkable time with low-interest rates, great housing prices and hundreds to thousands of homes to look consider. For sellers, it’s been downright depressing as they have watched their home values drop and sit on the market for months.
But finally, from all indicators, we are seeing a housing market that is on the road to recovery. Home prices are rising and buyers are now turning out in greater numbers. With homes priced correctly, we are seeing multiple offers and properties are going quickly. The good news for buyers: Homes are still affordable and we have historically low-interest rates.
So how does 2013 look? As the economy picks up steam and employment improving, we do anticipate seeing home prices continuing their move up. How much? No one knows. For buyers still waiting for the market to continue to drop, no one in the real estate industry sees that happening. For serious buyers, now is the time to focus as there will be competition for those highly desirable homes that again, are priced right.
It is true, that while the market is improving, buyers are still extremely cautious. Of course, the sting from the past few years is still felt by all of us and the stories of our economy still make the front pages of the paper. Buyers are nervous about lending, consumer spending and their jobs. Yet again, all signs that we are reading indicates that we are on the path to recovery.
Obviously, as home prices rise, sellers are breathing a sigh of relief. We are not seeing the panic that many homeowners faced because again, if a home is priced right, buyers will come. Take into consideration that we are seeing several homes that are listed and sold quickly for near or at their asking price. For those who need to sell, they know that the price must not only be right, but attention to repairs and curb appeal is vital.
For buyers, let’s look at the advantages of home ownership
1. Rents are rising. No matter what happens, rents will always rise.
2. Buyers are building equity. If you plan on staying in a community for several years, your home will slowly rise in value and building equity is better than paying a landlord.
3. Your home is your castle. Homeowners can paint, remodel and make improvements or changes they want. It’s a place to call your own.
4. You can still find a good deal: There are still plenty of good, affordable homes out there and interest rates are incredible.
What I am hearing these days from some buyers these days is that they are on the fence. They ask: “What if home prices fall further?” Again, there is no way to confirm what will happen in the real estate industry. We just don’t have the crystal ball that can predict the future. But one thing is for sure: interest rates will rise from their now historic lows. So look at it this way:
Let’s look at a home priced at $300,000. For a 30 year mortgage at an interest rate of 3.25 percent, a buyer will be paying a total of $375,842 (considering 20 percent down payment at $60,000) at the end of their loan The monthly payment would be $1044.00.
Now let’s say that same house is still on the market a year later but is now listed at $289,000. The buyer who passed on it before is high-fiving himself because now the home is $11,000 less. The problem? The interest rate for a 30 year mortgage is now 5 percent. What does this do? It means that at the end of his loan, he will pay $447, 120 (with 20 percent down or $57,800) and his house payment will be $1,242.00.
So using that above example, it’s safe to say that by waiting to save $11,000 off of the list price, the buyer ended up spending an additional $71,000.
The question buyers must ask themselves is not when housing prices are going to go up, but when are interest rates going up?
When you see the numbers compared side by side, it’s safe to say that for buyers on the fence, the time to buy a house is 2013.